The upcoming March deadline to the stamp duty holiday is already causing significant congestion in the housing market, leading trade bodies have warned, and it is now likely that many cases will not be completed leading to calls for the government to extend the cut-off date.

IMLA and the AMI said the pressure is being caused by the significant surge in purchase transactions from July onwards. Those buying properties for less than £500,000 will pay no stamp duty if they complete in time. If they miss the date, however, they will be liable to pay the tax on the value of the property above £125,000.

The market has processed record levels of new applications from buyers whilst managing the varied and continuing impacts of COVID-19 on their businesses. Once mortgage offers are issued and borrowers move on to try to achieve exchange and eventually completion, the pressure moves on to conveyancers, who are also facing record volumes of business.

IMLA executive director Kate Davies said: “We are concerned, as we approach the stamp duty holiday deadline, that borrowers need to be realistic about what will happen if they miss the 31 March cut-off date.  Those who do miss it will need to be aware of how much stamp duty they may be liable to pay – and have a plan for finding that cash.  If they can’t – there is a risk that their sale may fall through – taking with it a number of other transactions if there is a chain. 

“Lenders, intermediaries and conveyancers will be as upfront as possible with borrowers and manage their expectations, but it is also vital that borrowers plan ahead and ensure they have the necessary funds in place.  We are asking all our members to work to increase post offer operational support, and our broker and conveyancer partners to assess their new business pipelines.  This will ensure as many complete before any deadline. We want to avoid borrowers losing out – through no fault of their own – and have called for some flexibility to the deadline which would ease the immediate pressure on lenders and conveyancers, and treat borrowers whose cases are already in the pipeline more fairly.  One way of doing this would be to taper the withdrawal of the tax exemption rather than apply a hard stop on 31 March.”

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